Correlation Between Yulon and Taiwan Glass
Can any of the company-specific risk be diversified away by investing in both Yulon and Taiwan Glass at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Yulon and Taiwan Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Motor Co and Taiwan Glass Ind, you can compare the effects of market volatilities on Yulon and Taiwan Glass and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Yulon with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon and Taiwan Glass.
Diversification Opportunities for Yulon and Taiwan Glass
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yulon and Taiwan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Motor Co and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and Yulon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Yulon Motor Co are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of Yulon i.e., Yulon and Taiwan Glass go up and down completely randomly.
Pair Corralation between Yulon and Taiwan Glass
Assuming the 90 days trading horizon Yulon Motor Co is expected to under-perform the Taiwan Glass. But the stock apears to be less risky and, when comparing its historical volatility, Yulon Motor Co is 1.23 times less risky than Taiwan Glass. The stock trades about -0.04 of its potential returns per unit of risk. The Taiwan Glass Ind is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,945 in Taiwan Glass Ind on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Taiwan Glass Ind or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yulon Motor Co vs. Taiwan Glass Ind
Performance |
| Timeline |
| Yulon Motor |
| Taiwan Glass Ind |
Yulon and Taiwan Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon and Taiwan Glass
The main advantage of trading using opposite Yulon and Taiwan Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon position performs unexpectedly, Taiwan Glass can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Taiwan Glass will offset losses from the drop in Taiwan Glass' long position.| Yulon vs. China Motor Corp | Yulon vs. China Steel Corp | Yulon vs. Nan Ya Plastics | Yulon vs. Chang Hwa Commercial |
| Taiwan Glass vs. Yulon Motor Co | Taiwan Glass vs. Far Eastern Department | Taiwan Glass vs. China Steel Corp | Taiwan Glass vs. Chang Hwa Commercial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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